Zimbabwe’s Finance Ministry faces mounting pressure after a parliamentary investigation revealed it still owes US$38.7 million to former employees of the defunct Zimbabwe Iron and Steel Company (ZiscoSteel), some of whom have waited over a decade for their pension benefits.
The Parliamentary Portfolio Committee on Budget, Finance and Investment Promotion disclosed Tuesday that the government failed to properly honor pension obligations originally deducted in US dollars between 2009 and 2016 but never remitted to First Mutual Life (FML), the designated pension fund administrator.
Though the government formally assumed ZiscoSteel’s debts through the 2018 Debt Assumption Act, its 2021 payment of ZWL$39.2 million severely shortchanged pensioners by using an artificial 1:1 exchange rate when the actual interbank rate stood at 1:90.
“This currency manipulation effectively erased 98% of the payment’s real value,” the committee chairman stated during the presentation at Parliament in Mount Hampden.
The committee’s investigation revealed that a 2018 actuarial valuation placed the total pension liability at US$61.5 million, with only a fraction effectively paid due to the controversial currency conversion approach.
First Mutual Life faced sharp criticism for poor fund management, while the Insurance and Pensions Commission (Ipec) was blamed for regulatory failures between 2009 and 2017 that allowed the situation to deteriorate unchecked.
The report highlighted government inaction regarding Statutory Instrument 162 of 2023, legislation specifically introduced last year to address historical pension losses identified in the Justice Smith Commission of Inquiry Report of 2017.
“Despite being enacted over a year ago, this statutory instrument providing clear remedies for affected pensioners remains unenforced,” according to the committee’s findings.
Parliament has now recommended that the Finance Ministry and Ipec fully implement the compensation framework by December 2025 and amend the Zimbabwe Iron and Steel Debt Assumption Act to align with current actuarial findings.
Former ZiscoSteel employees, many now elderly and facing economic hardship after the company’s collapse in 2016, have been protesting the payment delays as Zimbabwe continues to grapple with broader economic challenges.
The government had previously allocated US$175 million to compensate various groups of pensioners affected by the 2009 currency reforms, but implementation has stalled as many compensation schemes have failed to meet regulatory requirements.
